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Recognition and Analysis of Connected Transaction’s Earnings Management in Letv Ecology

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DOI: 10.23977/etemss.2018.1602


Wang Fushun

Corresponding Author

Wang Fushun


Through financial strategy matrix, the paper firstly concludes Letv’s problems on rapid expansion, single profits and capital shortage, indicating that the current financial status of Letv is difficult to support “Letv ecology” constructed by its management. It has earnings management motivation. Subsequently, through further analysis, it is found that Letv carried out earnings management of connected transaction by non-commercial purchase and sales and the means of loss "shifting" minority. Finally, this paper puts forward reasonable suggestions on how to improve the company’s internal control system and standardize information disclosure of connected transaction.


Letv Ecology, Connected transaction, Earnings management, Case study

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